KembaraXtra-Islamic Finance: Nature of the Objects of the Contract

Introduction

In Islamic commercial law, one of the fundamental requirements for the validity of a contract is that the nature of the object (subject matter) must suit the type of contract being concluded. This principle ensures that the agreement is logical, consistent, and aligned with the purpose of the specific contract.


For instance, in an Istisna’ contract, the object must be something that is yet to be manufactured or constructed. The essence of this contract lies in the transformation of raw materials into a finished product, not in selling an existing item. Similarly, in an Ijarah (lease) contract, the asset must be one whose substance remains intact after usage, such as a house, vehicle, or equipment. Items that are consumed (like food, fuel, or fruit) are not valid lease objects, because they cannot be returned in their original form after use.


This condition is rooted in the Shari’ah’s broader objective of justice, transparency, and avoiding gharar (uncertainty). Ensuring that the object of a contract matches its nature protects both parties from disputes, misrepresentation, and invalid agreements.


Qur’an and Hadith Evidence

• “Give full measure and weight with justice and do not deprive the people of their due.” (Surah Al-A‘raf 7:85)
• The Prophet ﷺ said: “The Muslims are bound by their conditions, except a condition that makes the lawful unlawful or the unlawful lawful.” (Sunan al-Tirmidhi)

These references emphasize fairness, clarity, and ensuring that each contract’s object is in harmony with its type.

10 Case Scenarios with Solutions

Case 1: Istisna’ for a Building

Scenario: A school owner hires a contractor under Istisna’ to build a new dormitory.
Solution: Valid. The object (a building to be constructed) suits the Istisna’ contract.

Case 2: Istisna’ for an Existing Car

Scenario: A buyer enters an Istisna’ contract to “manufacture” a car that already exists in stock.
Solution: Invalid. Istisna’ requires construction or production, not resale of an existing item.

Case 3: Ijarah of a House

Scenario: A family rents a house for one year under an Ijarah contract.
Solution: Valid. The asset (house) remains intact after usage.

Case 4: Ijarah of Vegetables

Scenario: A tenant tries to rent vegetables from a farmer for consumption.
Solution: Invalid. Consumables cannot be leased because they perish after use.

Case 5: Leasing a Car

Scenario: A company leases a car to its employees for official use.
Solution: Valid. The car remains intact after use and fits Ijarah rules.

Case 6: Leasing Petrol

Scenario: A petrol supplier offers to lease petrol to customers.
Solution: Invalid. Petrol is consumed and cannot be returned; it must be sold, not leased.


Case 7: Istisna’ for Furniture

Scenario: A hotel contracts a carpenter under Istisna’ to design and produce 50 custom-made chairs.
Solution: Valid. Manufacturing is involved, fulfilling Istisna’ requirements.

Case 8: Ijarah of a Mobile Phone

Scenario: A customer rents a mobile phone for two months.
Solution: Valid, provided it is returned intact after use. Damage liability must be clarified in the contract.

Case 9: Sale Instead of Lease

Scenario: A shopkeeper tries to rent bread to a customer.
Solution: Invalid. Bread is consumable; it must be sold, not leased. Qur’an 83:1–3 warns against unjust trade.

Case 10: Hybrid Mistake in Contract

Scenario: A company agrees to “lease” raw materials (timber) to a factory for production.
Solution: Invalid as a lease. Timber will be consumed in production. The correct contract is sale, not lease.


Key Lessons

• The object must suit the contract type:
  • Istisna’ → Only for things to be manufactured/constructed.
  • Ijarah → Only for durable, non-consumable assets.


• Consumable items (food, fuel, fruit) cannot be leased.
• Aligning the nature of objects with the nature of contracts ensures Shari’ah compliance and prevents disputes.